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Oil and Gas Roundup — Jan. 23

January 23, 2017
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Rig count soars in Oklahoma, nationwide

Drilling activity surged throughout Oklahoma and the region this week, fueling continued optimism that the oil and natural gas industry will continue to recover.

The number of rigs drilling for oil and natural gas nationwide jumped by 35 this week, marking the largest weekly gain since August 2012, according to numbers released by Baker Hughes.

The count in Oklahoma increased by seven, the largest weekly gain since November 2014.

"Oklahoma is well positioned with the STACK and SCOOP and in that a lot of Oklahoma firms have acreage in the Permian Basin," said Russell Evans, executive director of the Steven C. Agee Economic Research & Policy Institute at Oklahoma City University.

"Those are among the plays that are profitable at a price somewhere in the upper $40s to the mid $50s. I think that bodes well for us as prices firm up in the year ahead."

The state count is up 37 from the low of 54 in February 2016 and is up four from one year ago. The count still is off 57 percent from 214 in November 2014, soon after oil prices peaked.

Read the NewsOK story.

Trump administration working on first energy policy changes

Donald Trump’s advisers have prepared a short list of energy and environmental policy changes he can take now that he has been sworn in as president, including steps to limit the role that climate change plays in government decisions and speed the review of cross-border pipelines.

The list of actions Trump can take imminently includes nullifying former President Barack Obama’s guidelines that federal agencies weigh climate change when approving pipelines, deciding what areas to open for drilling or taking other major actions, two people familiar with Trump’s transition planning say.

Soon after Trump took the oath of office, an "America First Energy Plan" posted on the White House website that enshrined many of his campaign pledges as formal policy goals, including a commitment to eliminate "harmful and unnecessary" regulations that throttle domestic development. Explicit targets for repeal include Obama’s Climate Action Plan, which limits carbon emissions from power plants, and a water pollution rule.

"For too long, we’ve been held back by burdensome regulations on our energy industry," Trump’s plan says, describing domestic energy production as critical to "achieving independence from the OPEC cartel and any nations hostile to our interests."

Trump also is being counseled, according to the people familiar with the planning, to suspend the government’s use of a metric known as the social cost of carbon until it can be reviewed and recalculated, and to rescind a 49-year-old executive order that put the State Department in charge of permitting border-crossing oil pipelines.

Read more at Bloomberg.

North Dakota tribe formally calls on pipeline protesters to disperse

A Sioux tribal council on Saturday formally asked hundreds of protesters to clear out of three camps near its North Dakota reservation used to stage months of sometimes violent protests against the proposed Dakota Access Pipeline.

The Standing Rock Sioux Tribe on Friday unanimously passed a resolution calling for the camps to be dismantled, it said on its Facebook page on Saturday. The tribe has been encouraging protesters to go home since the U.S. Army Corps of Engineers agreed to an environmental review of the $3.8 billion project in December.

Despite earlier discussions about alternative sites, the resolution made no provision for relocating the estimated 600 protesters, which include non-native environmental activists and Native Americans from outside the tribe.

"The pipeline fight has moved beyond the camps and our strategy must evolve with the process," Standing Rock Tribal Chairman David Archambault II said in a statement dated Saturday.

The council said heavy snowfall in the area had raised the danger of flooding, and this week's clashes with police could imperil the environmental review process.

"Because we worked together, the federal government will prepare an Environmental Impact Statement," the tribe said. "Moving forward, our ultimate objective is best served by our elected officials, navigating strategically through the administrative and legal processes."

Read more at Reuters.

Southern California may run out of gas

The Southern California Gas Co. warned Sunday that cold weather -- and the loss of its main local storage resource -- may put normal electric and natural gas deliveries at risk across Southern California next week.

The company did not specify how large that risk is.

The utility asked its customers to reduce natural gas use, turn down their thermostats and take other steps "to help lower the risk of possible natural gas and electricity shortages," according to a news release.

More than 95 percent of Southland homes use natural gas for heat, and 60 percent of the electricity used in the area is generated using natural gas.

The company had in past years stored gas brought in by pipeline in the Aliso Canyon storage area, but that was ended when a massive natural gas leak spewed the fuel into the air above Porter Ranch.

The company said it and San Diego Gas & Electric were issuing a "system-wide curtailment watch" for the firms' "non-core" customers, including electrical generating stations and large commercial or industrial suppliers.

In the statement, SoCalGas said it and SDG&E are currently meeting system demands utilizing gas flowing in from interstate pipelines, plus the limited local storage facilities it has available.

In a statement issued to reporters, the company said the loss of its Aliso Canyon storage facility has led to concerns by state regulators that the company would not have enough pipeline capacity and local storage to handle demand on very hot or cold days.

No word on how large the shortfall might be.

Increase in Mexico’s natural gas plans expected to drive demand for U.S. imports

Natural gas-fired power plants account for the majority of power in Mexico, and additions to the country’s energy capacity will likely drive up Mexico’s demand for natural gas, according to an analysis by the U.S. Department of Energy.

The increased demand would open and expand markets for natural gas from Texas shale and pipeline companies. Texas firms such as Kinder Morgan and Spectra Energy, both of Houston, and Energy Transfer Partners of Dallas are developing or expanding pipelines to carry more natural gas to Mexico.

Natural gas generated 54 percent of Mexico’s power in 2015, up from only 34 percent 10 years before. Natural gas is also expected to account for 60 percent of the additions to Mexico’s power grid over the next three years.

As a result, Mexico’s demand for natural gas is expected to greatly increase, and that demand will be largely met by imports from the United States, according to the Energy Department.

Mexico has reformed its electricity market to open it up to private investment and create a wholesale power market, with the aim of reducing electricity costs and switching to cleaner-burning fuels. Mexico relies heavily on fuel oil to generate electricity and is is also trying to make a transition to natural gas, which produces fewer pollutants.  By the end of last year, Mexico had converted 4.3 gigawatts of fuel oil units to natural gas to help meet the government’s goal of a 90 percent reduction in fuel oil consumption by 2018.

— Fuelfix.
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